Intervest Bancshares Corporation Reports 2007 Fourth Quarter Earnings of $3.9 Million...

Intervest Bancshares Corporation Reports 2007 Fourth Quarter Earnings of $3.9 Million and Full Year Earnings of $19.4 Million

NEW YORK--(Business Wire)--Intervest Bancshares Corporation (NASDAQ-GS:IBCA) (the "Company")
today reported that its net earnings for the fourth quarter of 2007
("Q4-07") were $3.9 million, or $0.48 per diluted share, compared to
$5.8 million, or $0.69 per diluted share, for the fourth quarter of
2006 ("Q4-06"). Net earnings for 2007 were $19.4 million, or $2.31 per
diluted share, compared to $23.5 million, or $2.82 per diluted share,
for 2006. Book value per common share increased to $22.23 at December
31, 2007, from $20.31 at December 31, 2006. The Company does not own,
originate or invest in sub prime single-family home loans or
construction/development loans.

Net earnings for Q4-07 decreased by $1.9 million from Q4-06
primarily due to a $2.6 million decrease in net interest and dividend
income and $0.5 million increase in noninterest expenses, partially
offset by a $1.3 million decrease in the provision for income taxes.
Net interest and dividend income was lower due to a decrease in the
Company's net interest margin. The margin (excluding loan prepayment
income) decreased to 1.89% in Q4-07, from 2.48% in Q4-06, due to an
increase in nonaccrual loans, a higher cost of deposits and repayments
of higher yielding loans coupled with lower competitive pricing for
new loans. Interest income that was not recorded on nonaccrual loans
amounted to $1.9 million in Q4-07, compared to a $0.1 million net
recovery of interest in Q4-06. Noninterest expenses increased
primarily due to $0.5 million of expenses associated with nonaccrual
loans/foreclosed real estate and a $0.3 million increase in FDIC
insurance premiums (due to a higher rate structure imposed by the FDIC
on all insured financial institutions), partially offset by $0.5
million of expense from the early retirement of debentures in Q4-06
which did not recur. The provision for loan losses decreased slightly
to $0.7 million in Q4-07, from $0.8 million in Q4-06 as the impact of
a decline in the rate of net loan growth was largely offset by
additional provisions resulting from credit downgrades on nonaccrual
loans. Noninterest income decreased to $1.7 million in Q4-07, from
$1.9 million in Q4-06 due to a lower level of income from loan
prepayments. The Company's effective income tax rate was 43% in Q4-07,
compared to 42% in Q4-06. The Company had 72 employees at December 31,
2007 and 2006. The Company's efficiency ratio, which is a measure of
its ability to control expenses as a percentage of its revenues, was
34% in Q4-07, compared to 23% in Q4-06. Return on average assets and
equity decreased to 0.77% and 8.76% respectively, in Q4-07, from 1.18%
and 14.56% respectively, in Q4-06. The efficiency ratio and returns on
average assets and equity were negatively affected by nonaccrual loans
and higher FDIC insurance premiums.

Net earnings for 2007 decreased by $4.1 million from 2006 due to
an $8.0 million decrease in net interest and dividend income and a
$1.1 million increase in the provision for loan losses, partially
offset by a $2.0 million increase in noninterest income, a $2.9
million decrease in the provision for income taxes and a $0.1 million
decrease in noninterest expenses. The net interest margin (excluding
loan prepayment income) decreased to 2.11% in 2007, from 2.75% in 2006
due to the same reasons noted above for the quarterly period. Interest
income that was not recorded on nonaccrual loans amounted to $4.5
million in 2007, compared to $0.2 million in 2006. The provision for
loan losses increased due to credit downgrades on nonaccrual loans.
Noninterest income increased due to a higher level of income from loan
prepayments, which included $2.5 million of income from the early
payoff of one loan. Noninterest expenses remained relatively unchanged
as a one-time charge of $1.5 million recorded in 2006 in connection
with death benefits payable to the Company's former Chairman was
offset by $0.7 million of expenses associated with nonaccrual
loans/foreclosed real estate and a $0.9 million increase in FDIC
insurance premiums. The Company's effective income tax rate was 44% in
2007, compared to 43% in 2006.

Total assets at December 31, 2007 amounted to $2.0 billion,
compared to $1.97 billion at December 31, 2006. The increase reflected
the growth in the Company's loan portfolio, partially offset by a
lower level of security investments and other short-term investments.

Total loans, net of unearned fees, at December 31, 2007 increased
to $1.61 billion, from $1.49 billion at December 31, 2006. The
increase was due to new originations secured by commercial and
multifamily real estate exceeding principal repayments. New
originations totaled $88 million for Q4-07 and $555 million for 2007,
compared to $111 million for Q4-06 and $548 million for 2006.
Principal repayments totaled $103 million for Q4-07 and $433 million
for 2007, compared to $113 million for Q4-06 and $427 million for
2006.

Total nonaccrual loans increased to $90.8 million (18 loans) at
December 31, 2007, from $3.3 million (2 loans) at December 31, 2006.
Foreclosure proceedings are pending on all of the loans and are in
various stages of resolution, including some proceedings that have
been temporarily stayed by reason of bankruptcy filings. The Company
believes that the estimated fair value of each of the underlying
collateral properties continues to exceed its recorded investment in
the related nonaccrual loan as of December 31, 2007. However, there
can be no assurance that the Company will not incur loan chargeoffs or
significant expenses with respect to the ultimate collection of these
loans. At December 31, 2007, two loans totaling $11.9 million were 90
days past due and still accruing interest. The loans have matured and
the borrowers continue to make monthly payments of principal and
interest. One loan ($0.9 million) will be extended by the Company and
the other loan ($11.0 million) may be extended or the Company will
continue to collect monthly payments of principal and interest until
it is repaid in full.

The total allowance for loan losses amounted to $21.6 million at
December 31, 2007, compared to $17.8 million at December 31, 2006. The
allowance represented 1.34% of total loans (net of deferred fees)
outstanding at December 31, 2007 and 1.20% at December 31, 2006. The
increase in the allowance was due to provisions totaling $3.8 million
during the year, of which $2.2 million was attributable to credit
downgrades on nonaccrual loans and $1.6 million from net loan growth
of $122 million from December 31, 2006.

Total securities held to maturity at December 31, 2007 decreased
to $344 million, from $404 million at December 31, 2006, due to
maturities and calls exceeding new purchases. The investment
portfolio, which is held by Intervest National Bank, had a
weighted-average remaining contractual maturity of 4.0 years and a
yield of 5.01% at December 31, 2007. The Bank has used the proceeds
from the security repayments to partially fund new loans. The Bank
invests in U.S. government agency debt obligations to emphasize safety
and liquidity. The Company does not own or invest in collateralized
debt obligations or collateralized mortgage obligations.

Total deposits at December 31, 2007 increased to $1.66 billion,
from $1.59 billion at December 31, 2006, reflecting an increase in
certificate of deposit accounts. The Bank's goal is to target its
loan-to-deposit ratio at approximately 85%. This ratio was 88% at
December 31, 2007.

Total borrowed funds and related interest payable at December 31,
2007 decreased to $136 million, from $173 million at December 31,
2006, due to a $25 million decrease in short-term FHLBNY advances
outstanding and a $12 million decrease in outstanding debentures and
related interest payable resulting from cash repayments and the
conversion of certain debentures into the Holding Company's Class A
common stock.

Total stockholders' equity at December 31, 2007 increased to
$179.5 million, from $170.0 million at December 31, 2006. The increase
was due to the following: $19.4 million from net earnings, $1.9
million from the conversion of debentures and $0.3 million from
stock-based compensation, partially offset by the payment a $2.1
million cash dividend in June and the repurchase of $10 million of
Class A common stock. In 2007, the Holding Company repurchased a total
of 404,339 shares of its Class A common stock for $10 million under
its share repurchase plan.

Intervest Bancshares Corporation is a financial holding company.
Its operating subsidiaries are: Intervest National Bank, a nationally
chartered commercial bank that has its headquarters and full-service
banking office at One Rockefeller Plaza, in New York City, and a total
of six full-service banking offices in Clearwater and Gulfport,
Florida; and Intervest Mortgage Corporation, a mortgage investment
company. Intervest National Bank maintains capital ratios in excess of
the regulatory requirements to be designated as a well-capitalized
institution. Intervest Bancshares Corporation's Class A Common Stock
is listed on the NASDAQ Global Select Market: Trading Symbol IBCA.

This press release may contain forward-looking information. Except
for historical information, the matters discussed herein are subject
to certain risks and uncertainties that may affect the Company's
actual results of operations. The following important factors, among
others, could cause actual results to differ materially from those set
forth in forward looking statements: changes in general economic
conditions in the Company's market areas; changes in policies by
regulatory agencies; fluctuations in interest rates; demand for loans;
and competition. Reference is made to the Company's filings with the
SEC for further discussion of risks and uncertainties regarding the
Company's business. Historical results are not necessarily indicative
of the future prospects of the Company.

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*T
INTERVEST BANCSHARES CORPORATION
Selected Consolidated Financial Information
----------------------------------------------------------------------

Quarter Ended Year Ended
December 31, December 31,
--------------------------------------------
(Dollars in thousands,
except per share amounts) 2007 2006 2007 2006
----------------------------------------------------------------------
Selected Operating Data:
Interest and dividend
income $ 32,185 $ 34,042 $ 131,916 $ 128,605
Interest expense 22,635 21,864 89,653 78,297
--------------------------------------------
Net interest and dividend
income 9,550 12,178 42,263 50,308
Provision for loan losses 668 795 3,760 2,652
--------------------------------------------
Net interest and dividend
income after provision
for loan losses 8,882 11,383 38,503 47,656
Noninterest income 1,704 1,946 8,825 6,855
Noninterest expenses 3,774 3,297 12,876 13,027
--------------------------------------------
Earnings before income
taxes 6,812 10,032 34,452 41,484
Provision for income taxes 2,933 4,213 15,012 17,953
--------------------------------------------
Net earnings $ 3,879 $ 5,819 $ 19,440 $ 23,531
============================================
Basic earnings per share $ 0.48 $ 0.72 $ 2.35 $ 2.98
Diluted earnings per share$ 0.48 $ 0.69 $ 2.31 $ 2.82
Adjusted net earnings for
diluted earnings per
share (1) $ 3,879 $ 5,854 $ 19,484 $ 23,679
Weighted-average common
shares and common
equivalent shares
outstanding for
computing:
Basic earnings per
share 8,083,562 8,051,357 8,275,539 7,893,489
Diluted earnings per
share (2) 8,155,481 8,507,245 8,422,017 8,401,379
Common shares outstanding
at end of period 8,075,812 8,371,595 8,075,812 8,371,595
Common stock warrants
outstanding at end of
period 332,640 195,000 332,640 195,000
----------------------------------------------------------------------
Yield on interest-earning
assets 6.36% 6.93% 6.58% 7.04%
Cost of funds 5.01% 4.93% 4.99% 4.74%
Net interest margin (3) 1.89% 2.48% 2.11% 2.75%
----------------------------------------------------------------------
Return on average assets
(annualized) 0.77% 1.18% 0.96% 1.28%
Return on average equity
(annualized) 8.76% 14.56% 11.05% 15.82%
Effective income tax rate 43.06% 42.00% 43.57% 43.28%
Efficiency ratio (4) 34% 23% 25% 23%
----------------------------------------------------------------------
Total average loans
outstanding $1,634,379 $1,489,992 $1,601,271 $1,451,366
Total average securities
outstanding $ 353,829 $ 430,919 $ 386,797 $ 343,728
Total average short-term
investments outstanding $ 19,528 $ 28,783 $ 18,187 $ 32,105
Total average interest-
earning assets
outstanding $2,007,736 $1,949,694 $2,006,255 $1,827,199
Total average assets
outstanding $2,023,606 $1,969,533 $2,024,600 $1,844,833
----------------------------------------------------------------------
Total average deposits
outstanding $1,655,292 $1,589,441 $1,641,298 $1,482,775
Total average borrowings
outstanding $ 136,831 $ 171,791 $ 156,783 $ 167,401
Total average interest-
bearing liabilities
outstanding $1,792,123 $1,761,232 $1,798,081 $1,650,176
Total average
stockholders' equity $ 177,202 $ 159,816 $ 175,881 $ 148,781
----------------------------------------------------------------------
*T

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Selected
Financial
Condition
Information: At Dec 31, At Sep 30, At Jun 30, At Mar 31, At Dec 31,
----------------------------------------------------------------------
2007 2007 2007 2007 2006
----------------------------------------------------------------------
Total assets $2,021,392 $2,033,662 $2,052,831 $2,040,658 $1,971,753
Total cash and
short-term
investments $ 33,086 $ 24,081 $ 39,321 $ 84,453 $ 40,195
Total
securities
held to
maturity $ 344,105 $ 347,001 $ 359,687 $ 373,322 $ 404,015
Total FRB and
FHLB stock $ 6,351 $ 6,351 $ 8,511 $ 6,001 $ 6,938
Total loans,
net of
unearned fees $1,614,032 $1,628,387 $1,618,491 $1,550,370 $1,490,653
Total deposits $1,659,174 $1,673,443 $1,636,287 $1,677,705 $1,588,534
Total borrowed
funds and
accrued
interest
payable $ 136,434 $ 136,247 $ 190,007 $ 144,658 $ 172,909
Total
stockholders'
equity $ 179,561 $ 177,182 $ 177,720 $ 175,498 $ 170,046
Total allowance
for loan
losses $ 21,593 $ 20,925 $ 19,402 $ 18,687 $ 17,833
Total loans
ninety days
past due and
still
accruing. $ 11,853 $ - $ 16,314 $ - $ -
Total
nonaccrual
loans $ 90,756 $ 74,526 $ 22,076 $ 11,735 $ 3,274
Total loan
chargeoffs $ - $ - $ - $ - $ -
Total
foreclosed
real estate $ - $ 975 $ 975 $ - $ -
Book value per
common share $ 22.23 $ 21.75 $ 21.25 $ 20.95 $ 20.31
Allowance for
loan losses /
net loans 1.34% 1.29% 1.20% 1.21% 1.20%
----------------------------------------------------------------------
(1) Represents net earnings plus interest expense on dilutive
convertible debentures, net of taxes, that would not occur if the
convertible debentures were assumed to be converted during the period
they were outstanding for purposes of computing diluted earnings per
share.
(2) Diluted EPS includes shares that would be outstanding if dilutive
common stock warrants and convertible debentures were assumed to be
exercised/converted during the period. All outstanding warrants were
considered for the EPS computations.
(3) Net interest margin is reported exclusive of income from loan
prepayments, which is included as a component of noninterest income.
Inclusive of such income, the margin would compute to 2.12% and 2.79%
for the quarters ended December 31, 2007 and 2006, respectively, and
2.46% and 3.02% for the twelve-months ended December 31, 2007 and
2006, respectively.
(4) Represents noninterest expenses (excluding the provision for loan
losses) as a percentage of net interest and dividend income plus
noninterest income. Noninterest expenses for 2006 included a one-time
charge of $1.5 million.
*T

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INTERVEST BANCSHARES CORPORATION
Consolidated Financial Highlights
----------------------------------------------------------------------

At or For The Period Ended
-------------------------------------------------------

($ in Year Year Year Year Year
thousands, Ended Ended Ended Ended Ended
except per Dec 31, Dec 31, Dec 31, Dec 31, Dec 31,
share amounts) 2007 2006 2005 2004 2003
----------------------------------------------------------------------
Balance Sheet
Highlights:
Total assets $2,021,392 $1,971,753 $1,706,423 $1,316,751 $ 911,523
Asset growth
rate 3% 16% 30% 44% 33%
Total loans,
net of
unearned fees $1,614,032 $1,490,653 $1,367,986 $1,015,396 $ 671,125
Loan growth
rate 8% 9% 35% 51% 37%
Total deposits $1,659,174 $1,588,534 $1,375,330 $ 993,872 $ 675,513
Deposit growth
rate 4% 16% 38% 47% 34%
Loans/deposits
(Intervest
National Bank) 88% 84% 88% 86% 79%
Borrowed funds
and accrued
interest
payable $ 136,434 $ 172,909 $ 155,725 $ 202,682 $ 140,383
Stockholders'
equity $ 179,561 $ 170,046 $ 136,178 $ 90,094 $ 75,385
Common shares
outstanding
(1) 8,075,812 8,371,595 7,823,058 6,271,433 5,988,377
Common book
value per
share $ 22.23 $ 20.31 $ 17.41 $ 14.37 $ 12.59
Market price
per common
share $ 17.22 $ 34.41 $ 24.04 $ 19.74 $ 14.65
----------------------------------------------------------------------
Asset Quality
Highlights
Nonaccrual
loans $ 90,756 $ 3,274 $ 750 $ 4,607 $ 8,474
Loans ninety
days past due
and still
accruing $ 11,853 $ - $ 2,649 $ - $ -
Foreclosed real
estate $ - $ - $ - $ - $ -
Allowance for
loan losses $ 21,593 $ 17,833 $ 15,181 $ 11,106 $ 6,580
Loan recoveries$ - $ - $ - $ - $ -
Loan chargeoffs$ - $ - $ - $ - $ -
Allowance for
loan losses /
net loans 1.34% 1.20% 1.11% 1.09% 0.98%
----------------------------------------------------------------------
Statement of
Operations
Highlights:
Interest and
dividend
income $ 131,916 $ 128,605 $ 97,881 $ 66,549 $ 50,464
Interest
expense 89,653 78,297 57,447 38,683 28,564
-------------------------------------------------------
Net interest
and dividend
income 42,263 50,308 40,434 27,866 21,900
Provision for
loan losses 3,760 2,652 4,075 4,526 1,969
Noninterest
income 8,825 6,855 6,594 5,140 3,321
Noninterest
expenses 12,876 13,027 10,703 8,251 7,259
-------------------------------------------------------
Earnings before
income taxes 34,452 41,484 32,250 20,229 15,993
Provision for
income taxes 15,012 17,953 14,066 8,776 6,873
-------------------------------------------------------
Net earnings $ 19,440 $ 23,531 $ 18,184 $ 11,453 $ 9,120
-------------------------------------------------------
Basic earnings
per share $ 2.35 $ 2.98 $ 2.65 $ 1.89 $ 1.85
Diluted
earnings per
share $ 2.31 $ 2.82 $ 2.47 $ 1.71 $ 1.53
Adjusted net
earnings used
to calculate
diluted
earnings per
share $ 19,484 $ 23,679 $ 18,399 $ 11,707 $ 9,572
Average common
shares used to
calculate:
Basic
earnings
per share 8,275,539 7,893,489 6,861,887 6,068,755 4,938,995
Diluted
earnings
per share 8,422,017 8,401,379 7,449,658 6,826,176 6,257,720
Net interest
margin (2) 2.11% 2.75% 2.70% 2.52% 2.90%
Return on
average assets 0.96% 1.28% 1.20% 1.02% 1.19%
Return on
average equity 11.05% 15.82% 16.91% 14.14% 15.34%
Effective
income tax
rate 43.57% 43.28% 43.62% 43.38% 42.98%
Efficiency
ratio (3) 25% 23% 23% 25% 29%
Full-service
banking
offices 7 7 6 6 6
----------------------------------------------------------------------
(1) The decrease in shares in 2007 is comprised of 404,339 shares of
Class A common stock repurchased, partially offset by the issuance of
108,556 shares of Class a common stock from the conversion of
convertible debentures.
The increase in shares in 2006 is comprised of 501,465 shares from
the exercise of Class A common stock warrants and 47,072 shares
from the conversion of convertible debentures into Class A common
stock.
The increase in shares in 2005 is comprised of 1,436,468 shares
from a public offering of Class A common stock and 115,157 shares
from the conversion of convertible debentures into Class A common
stock.
The increase in shares in 2004 is comprised of 42,510 shares from
the exercise of Class A common stock warrants and 240,546 shares
from the conversion of convertible debentures into Class A common
stock.
(2) Net interest margin is reported exclusive of income from loan
prepayments, which is included as a component of noninterest income.
Inclusive of such income, the margin would compute to 2.46% for 2007,
3.02% for 2006, 3.04% for 2005, 2.84% for 2004 and 3.21% for 2003.
(3) Represents noninterest expenses (excluding the provision for loan
losses) as a percentage of net interest and dividend income plus
noninterest income. Noninterest expenses for 2006 included a one-time
charge of $1.5 million.
*T

Intervest Bancshares Corporation
Lowell S. Dansker, Chairman
212-218-2800
Fax: 212-218-2808

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